Back in January, Maine Governor Paul LePage and members of his administration presented the FY 2016-2017 biennial budget proposal to the state. Since then, various members of the administration have met with the 127th Legislature’s Appropriations and Financial Affairs standing committee (with other committees, as applicable) on multiple occasions, met with the public, and held numerous press conferences to sway not just members of the public but also their own party to support the proposals.

Now, it is the public’s turn to speak up. Maine House Democrats shared the following summarized testimony presented to the committee on Tuesday.

Adam Lee, Lee Auto Malls:“The idea of lowering the tax rate for the wealthiest members of society is misguided…When my taxes are lowered it leaves less to be distributed to the municipalities. I get a tax cut and everyone else in town gets to chip in to pay for it through higher property taxes. Doesn’t sound fair? It isn’t…. My business depends on a strong middle class. I sell good old fashioned Dodges, GMC trucks, Nissans, and used cars, as well as other brands. A strong middle class is not helped by tax breaks for the rich. Competitive rates, and tax breaks for the middle class is much more useful. A skilled workforce is the one of the single largest factors determining where a business locates. Invest in education, training, our University and community College System.”

Veteran and Nurse Richard Bissell of Bangor:“I’m here to oppose these drastic cuts proposed by the Governor for wealthy Mainers and corporations, especially when those cuts come at the expense of the middle class and poor Mainers…Property taxes are an impossible cost for many Mainers, from young couples and families that are in their first home up to seniors try to age in their homes.”

Small Business Owner Carson Lynch of Gorham Grind:“This plan would cut taxes for the very wealthy while effectively raising taxes on the lower and middle income Mainers. Not only is this morally wrong, it will hurt Maine small businesses and ship money out of state….My small business runs on very small margins. I’m not a Starbucks or Dunkin Donuts. A change to Maine’s tax code could make or break my business.”

Clam Digger Skip Worcester of Hermon:“I’m here today because I am deeply concerned with the Governor’s proposed cuts to income and corporate taxes in Maine…Corporations are making record profits in Maine but they are not paying their fair share in taxes – their taxes have been less and less and their profits have been higher and higher, it’s the reverse for us middle and lower classes. Our wages have stayed practically the same while the cost of living, heating and eating have gone up.”

Among others who spoke to the committee was Davida Ammerman of Madison, whose testimony is below.

Representative Rotundo, Senator Hamper, Representative Goode, and Senator McCormick, thank you for having me here today to speak with you.

I am here today to ask you to oppose the cuts to corporate and income tax in the Governor’s proposed budget. With this proposal, we will see the divisions increase between rural areas that are not so affluent and able to carry the cost, am\nd more affluent ones that will. In a town like Madison where I live, the option to tax non-profits is not a viable source of revenue, forcing the town to increase property taxes to continue being viable.

Without a fair and balanced budget we will be forcing older people to lose their homes, and rural town are going to have a hard time keeping up with basic services like roads, law enforcement, and schools. Being on fixed income, it is hard to be able to conceive of paying more in sales and property taxes, and for the increase in services that I will need as I age. The Governor’s proposal puts revenue at recession era levels, and it doesn’t add up so that means we are going to see more cuts at the state level in future years. This creates a huge amount of uncertainty for us aging Mainers- we don’t know what we can count on. I don’t know that I will be able to keep my house, or if I will be able to pass it on to my children as planned.

On the other end this is going to be very hard and discouraging for young people in Maine as well. Our daughter, a single mom just barely making ends meet, would have to sell her house that she has worked so hard to get if her property taxes go, if the Homestead Exemption is cut for Mainers under 65, and she loses the chance to deduct her mortgage payment. Young kids that are already fighting student loans and low wages will lose their chance to get ahead. So many kids are just getting by already- this is making the American Dream even more unattainable.

If we are going to start taxing non-profits and cutting so many programs in the state budget, how is that going to affect funding homeless shelters and other organizations providing services for people who are just barely getting by and depending on these services for life support?

I hate to see the American Dream being put out of reach for so many of the population.

Thank You.

Quinn Gormley of Portland was kind enough to share her prepared testimony as well:

My name is Quinn Gormley. I’m currently an undergraduate student at the University of Southern Maine in Portland, but I grew up in Damariscotta, where my father, a bus driver, and my mother, the director of our local library, still live and work today.

For most of my life, my family has proudly belonged to the working class in this state. Growing up, my parents taught me the value of a hard day’s work, as my mother pulled sixty or more hour weeks, often with little to no pay, to keep the doors of the library open, and as my dad, who for my entire life has had to balance three different jobs just to help us make ends meet, waking up at 5 in the morning to drive a school bus, and often working late into the evening to get everything done.

During the recession we were lucky. A school always needs bus drivers, and the library is valued by our community, so my parents managed to keep their jobs. Many in our town were not so lucky. And I so, as I read the details of this new budget, I am concerned. I am concerned that this budget is shifting the burden onto Middle Class families and families like my own are not going to be able to afford it.

As a student who is used to examining things critically, when I look at this budget, I see the governor’s tax cuts as forced false choices that prioritize income and estate tax cuts for Maine’s wealthiest individuals and large corporations at the expense of property tax relief for families like my own.

Every dollar in tax cuts is a dollar that will have to be made up for with spending cuts. It just doesn’t make sense to prioritize tax cuts that disproportionately benefit the wealthy and large corporations and leave the school bus drivers and librarians to fend for their own.

As I navigate college with the hope to stay in Maine once I graduate, this budget does not seem to pave the way for a state with increased job growth, in contrast, states that have pursued this path in recent years have actually seen worse, not better, economic performance than neighboring states. They’ve had to cut state investments in education, and workforce training. I want to stay, work, and live in Maine but when my state pushes policies that hurt education, job training, and the middle class, I doubt that I can.

This budget is the wrong path for Maine. It benefits a small percentage of Mainer’s, and the costs will be passed onto those hard working Mainers who are just trying to make it work. And so, I urge you; please oppose the cuts to corporate and income tax in this proposed budget. Thank you for your attention and all you do.

Democrats on the AFA committee later released their own statements:

Rep. Peggy Rotundo, the House Chair of the Appropriations Committee:“We haven’t been getting the the full story about Governor LePage’s budget. I’m deeply concerned that the ratcheting down of state revenues in the out years will mean fewer dollars in the future for workforce development, education, and many of the very things businesses and workers say we need to succeed. We want a tax reform plan that is paid for now and in the future so we don’t jeopardize our support for Maine families, our schools, or workforce, or for our local firefighters and police.”

Senator Linda Valentino (Saco): “I support tax reform but this budget sidelines Maine families at the expense of the wealthy and big corporations. We heard a lot of concerns from people today about the elimination of the mortgage interest deduction, the Homestead exemption, and the property tax deduction. If these deductions are eliminated, it will jeopardize Maine’s economic recovery.”

The combined fiscal impact of these tax cuts in FY 2019 is about $677 million per year, according to Maine Revenue Services. That’s a tax cut equal to 19% of General Fund revenue forecast for that year. The sales tax increases in the Governor’s budget don’t cover the cost of that tax cut, and as a result, the state must cut spending by $266 million in FY 2019. That spending cut will grow into subsequent fiscal years as the corporate income tax cut fully phases in.

Approximately $167 million of the governor’s proposed spending cuts will come in the form of the elimination of revenue sharing to towns and cities. Faced with a loss of revenue sharing and struggling to meet obligations to fund K-12 education, state and local governments will have to raise taxes and/or cut spending. That means higher taxes and/or fewer services like snowplowing, public safety, road maintenance, libraries, and parks. The governor’s proposal saves an additional $12 million by eliminating the homestead exemption for most Mainers.

The governor’s proposal fails to specify the remaining $90 million in state spending cuts it encompasses. In fact, the Governor’s budget only specifies a two-year spending plan while proposing tax cuts that span multiple budget periods. The income and estate tax cuts proposed in the Governor’s budget, combined with revamped arbitrary limits on state appropriation growth, will prevent the state from reaching the statutorily-mandated goal of funding 55% of the cost of K-12 education in the state any time in the near future. Yet the Governor’s budget proposal includes a target of 55% for Fiscal Year 2017 and beyond. That is not a credible, achievable objective given the income and estate tax cuts included in a different section of the same budget proposal.

Other points raised by MECEP for consideration:

1. The governor’s tax cuts aren’t paid for and are fiscally irresponsible. They set Maine up for future fiscal crises, which will lead to deep cuts to education, health care, job training, and other foundational components of a strong, sustainable economy.

By fiscal year 2019, the governor’s plan cuts income, estate, and corporate taxes by $690 million and raises sales and use taxes by $424 million. That leaves a shortfall of $266 million. The governor proposes to make up this shortfall, in part, by eliminating $167 million in state aid to towns for local public services. Legislators will have to make up the remaining balance by additional spending cuts beyond those that have been enacted over recent years.

The governor’s plan locks in recession-era levels of revenue putting state spending as a share of the economy at historic lows. That means state funding for education, health care, and other services will continue to fall behind even as the economy recovers. It also means that Maine will have virtually no capacity to absorb unanticipated future expenses or to maintain critical public investments when the next economic downturn occurs.

2. The governor’s tax cuts force false choices and prioritize income and estate tax cuts for Maine’s wealthiest individuals and large corporations at the expense of property tax relief for middle-class Mainers.

Every dollar in tax cuts is a dollar that legislators will have to make up by either raising other taxes or with cuts in spending for education and other services. At a time when the state is already failing to fulfill its commitments to Maine’s students and communities it doesn’t make sense to place a higher priority on tax cuts that disproportionately benefit the wealthy and large corporations. For example, eliminating the estate tax will cost over $37 million by fiscal year 2019 and benefit approximately 150 of the wealthiest estates. This potentially comes at the expense of making progress in funding K-12 education, supporting prescription drug assistance to low-income seniors, maintaining cost-effective health care prevention programs, or providing college scholarships to Maine’s future workers.

Part of the governor’s plan includes eliminating the Homestead Exemption for Maine residents under age 65 which is equivalent to raising property taxes between $120 and $160 for hundreds of thousands of Maine families. Additional property tax increases are likely for middle-class Mainers as communities are forced to pick up more of the costs of K-12 education, public safety, and road maintenance as called for in the governor’s budget.

While we don’t oppose cutting taxes, we believe it can be done in a way that doesn’t force false choices and that distributes the benefits more evenly across all income groups. Because this plan doesn’t maximize opportunities to export taxes to out-of-state visitors and part-year residents and places higher priority on tax cuts that deliver the greatest benefits to wealthy individuals and large corporations, it falls short in terms of securing adequate revenue and in improving the overall fairness of Maine’s tax system.

3. The governor’s tax plan is a failed prescription for growing Maine’s economy.

An interesting past few days with much back and forth discussion between Maine Governor Paul LePage, Democratic gubernatorial rival Rep. Mike Michaud and now Portland Press Herald- let’s review the “who said what and when”.

First, Paul LePage’s office sent out a press release early yesterday morning, designed to discuss the latest BEA reports of Maine’s personal income growth as dead last when compared to the rest of the New England states and 39th when stacked against those of the entire country, which in part read:

The U.S. Bureau of Economic Analysis (BEA) claims the other five New England states saw higher personal income growth than Maine, but that growth was driven by an increase in welfare benefits, especially in the form of Medicaid expansion. The BEA conceals welfare benefits by calling them “Personal Current Transfer Receipts.”

In addition to counting welfare benefits as personal income, the BEA includes another category called “all other personal current transfer receipts.” These are the health insurance premium subsidies paid as tax credits to enrollees of the Obamacare exchanges.

“It doesn’t matter what liberals call these payments, it is welfare, pure and simple,” said Governor LePage.

“Liberals from the White House all the way down to Democratic leadership in Augusta believe that redistribution of wealth—taking money from hard-working taxpayers and giving it to a growing number of welfare recipients—is personal income. It’s not. It’s just more welfare expansion. Democrats can obfuscate the numbers any way they want. The fact is that we have created thousands of jobs, more Mainers are working, and their income is going up.”

“LePage’s comments are an insult to Maine seniors who have worked long and hard to earn their Social Security and Medicare benefits,” said U.S. Rep. Mike Michaud, the Democratic nominee for governor. “These two programs have helped to provide a secure retirement to thousands upon thousands of hardworking men and women who have earned them one paycheck at a time. They deserve much better than to have their monthly Social Security checks called ‘welfare handouts.’ The governor should be embarrassed that he ever suggested such a thing.”

Gov. Paul LePage has long cast a wide net for programs that he says fit the definition of welfare. On Wednesday, in a media release written as an alternative take on new personal-income data from the federal Bureau of Economic Analysis, he lumped Social Security and Medicare into that definition.

The federal data released Tuesday put Maine’s personal-income growth at 0.5 percent in the first three months of 2014, which ranked 39th nationally, last in New England and well below the national rate of 0.8 percent.

LePage, however, said in the media release that Maine’s net personal earnings increased by 0.8 percent, in line with other New England states and slightly higher than the national rate of net personal earnings, 0.7 percent.

The governor arrived at his number by excluding what the federal bureau calls “personal current transfer receipts” and dividends, interest and rental income.

In other words, LePage changed the rules-his team inexplicably fudged the numbers to reflect a conclusion that falsely makes the administration look better than reality. What his office with their pretzel mathematics failed to do was crunch the other 49 states’ numbers similarly for a more standardized, accurate comparison with the national figures and conclusions. And the reason they can NOT do that is quite simple.

The other New England states have expanded Medicaid, seen much better economic growth than Maine- the sole holdout in New England- and because of his own refusal to allow for coverage of 70,000 additional Mainers and creation of tens of thousands of jobs across the state, Paul LePage thinks that the numbers as provided by BEA are unfair.

It would be as if 50 horses were lined up at Scarborough Downs, but one arbitrarily was given a 30 second head start rest of the field. That’s what LePage’s “new math” accomplished- and he very rightfully got called out for it by Michaud.

But back to Portland Press Herald’s involvement, with a reminder that just last year the governor in a fighter jet simulator photo op in Berwick “joked” about wanting to blow up the PPH and BDN buildings. This morning, LePage issued another press release, taking PPH to task… for reporting exactly what the governor said in his earlier release:

Governor Paul R. LePage issued the following statement today with regard to erroneous interpretations from the Portland Press Herald of his Medicaid expansion-related comments:

“I don’t think Social Security or Medicare is welfare. Only the most liberal interpretation of my statements about Medicaid expansion would twist my words to include Social Security and Medicare. Welfare expansion is not a reliable, nor is it a sustainable income source for personal growth income earnings.

While my opponents are fighting for welfare expansion, my Administration is committed to preserve funding and resources for Maine’s elderly. Some seniors may be forced out of their homes because of financial troubles within Maine’s nursing homes and it is why I have pushed so hard to adequately fund those facilities.”

Gov. Paul LePage earned the ire of seniors and the people who support them this week when he inappropriately referred to Social Security and Medicare as “welfare” in a press release intended to obscure his poor performance in improving Maine’s economy.

But now, as the governor tries to back away from his latest embarrassment, questions remain about exactly what LePage thinks “welfare” is.

In the past he has called municipal revenue sharing welfare. In addition, in his press release he referred to all “Personal Current Transfer Receipts” as welfare, which would include — in addition to Social Security and Medicare – many other programs, such as:

LePage, in his own words: “It doesn’t matter what liberals call these payments, it is welfare, pure and simple.”

“The governor’s disdain for Maine families is clear in his attitudes, in his policies and in his words. According to his press release, not only are Social Security and Medicare now welfare but veterans’ benefits and compensation for 9/11 victims are too. Where does he draw the line?” said Lizzy Reinholt, a spokesperson for U.S. Congressman Mike Michaud’s gubernatorial campaign. “The governor would like to hide his own dismal performance by pointing his finger at other people, blaming them for Maine’s sluggish economy. His actions and his words are holding Maine back.”

“Social Security is not welfare. Medicare is not welfare. Veterans benefits are not welfare,” Reinholt said. “Like many of the programs that the governor holds in disdain, they are part of the fabric that helps to hold our communities together.”

Gov. Paul LePage said in a statement Thursday that he doesn’t think Social Security or Medicare are welfare and he criticized the Portland Press Herald for making an “erroneous interpretation” of a prior press release from his office.

“Only the most liberal interpretation of my statements about Medicaid expansion would twist my words to include Social Security and Medicare,” he said in Thursday’s statement. “Welfare expansion is not a reliable, nor is it a sustainable income source for personal growth income earnings.”

The statement differs significantly from a press release LePage’s office issued Wednesday in response to a U.S. Bureau of Economic Analysis report that found Maine’s personal income growth was below the national average and last in New England.

“A select committee of the 126th Maine Legislature set out to attract adults with prior education credits back to school. An Act to Strengthen Maine’s Workforce and Economic Future (LD 90) creates a UMaine scholarship program for adults to finish their baccalaureate degrees, expands community college associate degree programs, and eases the transfer of credits between the two. It also establishes a task force to find ways to increase adult degree completion rates. The House and Senate both unanimously passed the bill, which will jumpstart new careers for an estimated 2,300 working Mainers, raise incomes, and provide needed workforce skills for today’s economy.

The committee is to be commended for their vision, hard work, and bipartisanship. Clearly LD 90 will help improve job prospects for many Mainers who, with a university education, can compete for better-paying jobs. Yet, low-income adults will have difficulty taking advantage of the bill’s good intentions.

Maine’s Competitive Skills Scholarship program (CSSP) does just that. CSSP provides grants to low-income students not only for tuition and books, but also for child care, transportation, and family emergencies critical for them to enter and stay in school. CSSP makes higher education accessible to low-income, working Mainers.

Unfortunately LD 90 does nothing for CSSP, which is proposed to be cut in the governor’s budget.

We applaud the efforts of the legislature’s workforce committee. We support its ongoing work. We urge it to take a second look at CSSP.”

Many thanks to MECEP for their excellent work and to Ms Harris for this important write-up.